6. Stockholders’ Equity

Stock-Based Compensation

2006 Stock Incentive Plan

The Company’s 2006 Stock Option Plan (“2006 Plan”) was established for granting stock incentive awards to directors, officers, employees and consultants of the Company. Upon closing of the Company’s IPO in August 2014, the Company ceased granting stock incentive awards under the 2006 Plan. The 2006 Plan provided for the grant of incentive and non-qualified stock options and restricted stock grants as determined by the Company’s board of directors. Under the 2006 Plan, stock options were generally granted with exercise prices equal to or greater than the fair value of the common stock as determined by the board of directors, expired no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years.

2014 Stock Incentive Plan

The Company’s 2014 Plan (“2014 Plan”, and together with the 2006 Plan, the “Plans”) provides for the issuance of shares of common stock in the form of stock options, awards of restricted stock, awards of restricted stock units, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights to directors, officers, employees and consultants of the Company. Since the establishment of the 2014 Plan, the Company has only granted stock options. Generally, stock options are granted with exercise prices equal to or greater than the fair value of the common stock on the date of grant, expire no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years.

The number of shares reserved for future issuance under the 2014 Plan is the sum of (1) 823,529 shares, (2) any shares that were granted under the 2006 Plan which are forfeited, lapsed unexercised or are settled in cash subsequent to the effective date of the 2014 Plan and (3) an annual increase on the first day of each calendar year beginning January 1, 2015 and ending on January 1, 2024, equal to the lesser of (A) 823,529 shares, (B) 4% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, and (C) such smaller number of shares determined by the Company’s board of directors. As of September 30, 2015 there were 524,330 shares available for future grant under the 2014 Plan.

Stock Options

During the nine months ended September 30, 2015, the Company granted options with an aggregate fair value of $8.6 million, which are being amortized into compensation expense over the vesting period of the options as the services are being provided. The following is a summary of option activity under the Plans:

	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2014	2,911,146		$	5.30	7.87	$	40,586
Granted	972,133		16.96
Exercised	(264,393	)	2.89			3,588
Cancelled	(147,950	)	6.52

Outstanding at September 30, 2015	3,470,936		8.69		7.64	11,396

Exercisable at September 30, 2015	1,649,062		4.36		6.16	8,850

Vested or expected to vest at September 30, 2015	3,238,718		8.34		7.53	11,181

The weighted-average fair values of options granted in the nine-month periods ended September 30, 2015 and 2014 were $8.91 per share and $5.71 per share, respectively, and were calculated using the following estimated assumptions:

	Nine Months Ended September 30,
	2015		2014
Weighted-average risk-free interest rate	1.70	%	1.93	%
Expected dividend yield	0.00	%	0.00	%
Expected volatility	55	%	61	%
Expected terms	5.9 years		6.0 years

Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan (the “2014 ESPP”) provides initially for granting up to 220,588 shares of the Company’s common stock to eligible employees. The 2014 ESPP plan period is semi-annual and allows participants to purchase the Company’s common stock at 85% of the lower of (i) the market value per share of common stock on the first day of the offering period or (ii) the market value per share of the common stock on the purchase date. Each participant can purchase up to a maximum of $25,000 per calendar year in fair market value of such shares of common stock, as determined by the market value per share of common stock at the beginning of the offering period. The Company issued 33,224 shares of common stock for total proceeds of $404,000 upon completion of the offering period ended April 30, 2015. The current offering period commenced on May 1, 2015 and ends November 15, 2015. Stock-based compensation expense from the 2014 ESPP for the three and nine-months ended September 30, 2015 was $66,000 and $192,000, respectively.

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense resulting from awards granted under stock incentive plans, including the 2014 ESPP, that was recorded in the Company’s results of operations for the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Research and development	$	440	$	127	$	1,017	$	250
Selling, general and administrative	882		425		1,882		807

Total stock-based compensation expense	$	1,322	$	552	$	2,899	$	1,057

As of September 30, 2015, there was $12.1 million of total unrecognized compensation cost related to unvested stock options granted under the Plans. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 3.0 years as of September 30, 2015.